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26 May 2017

Site visits: wellies at the ready

 A solicitor will often, in the case of development sites, visit a site with their clients before exchange of contracts to inspect it. Site visits can indentify issues which may only be apparent from inspection, including public rights of way which are not on the definitive map, boundary discrepancies, and items belonging to third parties.

By inspecting prior to exchange, there is the opportunity to deal with such matters in the contract or to ask the seller to address these, e.g. remove rubbish and chattels, put up signs and secure the site against unauthorised access. Below are some common issues and possibilities for resolving them.

Items on site

Generally, the best thing to do is to cover the matter in the contract. If the seller is to be required to remove certain items, such as old cars abandoned on the site, then photographs can be annexed to the contract and place the seller under an express obligation to act. 

Purchasers will also be able to ‘bottom out’ through correspondence whether any items are in third party ownership and, if so, it should be checked that Torts Act notices have been served requiring their collection or notifying their potential to sue.

An opportunity to obtain various indemnities in the contract. 

Grazing

It is not uncommon for the greenfield sites to be grazed by sheep or other animals. Whilst potentially not an issue in the short term (if the animals are keeping the grass down) as they were keeping the grass down) it needs to be established that there are no grazing rights or farm business tenancies in place and that the boundaries aree secure (to prevent livestock migrating from another field). 

If such a tenancy is in place, the rights of the tenant and opportunity to terminate the tenancy should be ascertained.

The contract can be made conditional on termination of any formal rights and vacant possession.

Contamination

Sometimes a site visit may throw up a serious matter such as visible waste or contamination on the site. Removal of such contamination may need to be signed off by an environmental health officer and such sign off may not be available until after completion.

  •  A retention could be held under the contract, which would give the purchaser security that they have access to funds to remedy the issue themselves if further works are required (or indeed to carry out the works if the seller is not proposing to do the same). 
  • Alternatively, sign off of removal of contamination could become a condition to completion or allow the purchaser to re-evaluate the price they are willing to pay for the site.  This also gives the parties an opportunity to tailor the environmental liability provisions in the contract.

Rights and overriding interests

A site visit may highlight matters which cannot be ascertained from searches, for example, dog walkers and others using the site recreationally and creating access rights (or potentially a Town and Village Green). 

Alternatively, there may be an occupier overriding interest which is not registered at the Land Registry, but which still binds the party who acquires the land.  For such an interest to override, the interest must belong to a person whose occupation would have been obvious on a reasonably careful inspection of the site at the time of the sale and be within the purchaser’s actual knowledge. 

Where there is a concern that rights may have been established, the purchaser can look at obtaining defective title indemnity insurance. Depending on the circumstances, the seller may be willing to pay for this.  This level of indemnity should reflect the gross development value of the site (or the affected part) or a funder’s valuation requirements.  It should also benefit successors in title including plot purchasers and mortgagees. 

Procedures for stopping up or directing rights of way or addressing potential claims of a Town and Village Green should also be considered.

Occassionally, a 'ransom strip' may be discovered between the site and the public highway, which could affect the proposed access.  These may result from inaccurate index map and highways searches. Insurance may offer a solution.

Advice

  • There are a number of cases where the seller has removed a valuable item prior to exchange that the purchaser believed would be included.  Depending on the nature of the site, as with residential purchases, an inventory could be included.  This may also be relevant on corporate/asset purchases.
  • A physical inspection will confirm the existence and location of features which may be flagged by your searches and the title, such as power lines, masts, watercourses and trees. Things which may be less apparent from desktop searches include the drainage, soil type and the gradient of the land.
  • A purchaser should be encouraged to visit the site early in the purchase proccess and immediately prior to exchange as it is at this point that the condition of the site is crystallised. 
  • For development sites, it is important to include an early access provision in the contract so that the purchaser can carry out investigations and surveys prior to completion.  The purchaser may also want to seek reliance on planning reports and other technical surveys and investigations that the seller has or is able to provide.

It is important to remember that buying land is not a pure contractual exercise. A sit inspection in good time is vital to maximise knowledge of the property, particularly as the system in England and Wales operates on the basis of caveat emptor or 'buyer beware'. Just don't forget your wellies...


For more information please contact Caroline Isherwood, senior associate, on +44 (0)20 7427 6762 or caroline.isherwood@crsblaw.com

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